Investor Confidence High Prior to Government Shutdown

Prior to the Oct. 1 government shutdown, investors had confidence in the U.S. capital markets and a majority felt very secure in investing in the U.S. publicly-traded companies.

That's according to the Center for Audit Quality's 2013 Main Street Investor Survey. The poll of 1,013 investors in the U.S. found that investor confidence was at 69%.

Investors said the longer the shutdown continued, the more their confidence would erode.

Investor confidence would plummet to a record low of 39% if Congress fails to raise the debt ceiling and the U.S. was to default on its financial obligations, the survey showed.

“We've not seen investor confidence in the U.S. capital markets fall below 60% in the seven years we've conducted our survey, including in 2008 at the height of the financial crisis,” said CAQ Executive Director Cindy Fornelli.

She added, “Staring at the real possibility that confidence dips to 39% if the U.S. defaults should be an incentive for policymakers to resolve this situation.” 

In addition to measuring confidence, the survey also explored the factors that influence investment decisions, including what types of information investors find essential to their decision-making process.

The survey found that investors consider more nonfinancial factors as being essential to their investment decisions than financial factors. Nonfinancial factors viewed as essential by four in 10 investors or more include:

• The sector or industry the company is in;
• Whether a company has sound corporate governance in place;
• The company's key strengths and weaknesses;
• The strategy for future company growth;
• The company's risks and opportunities;
• Whether the company is operating in a socially responsible manner and/or an environmentally-friendly fashion.

The Washington-based CAO said it is a public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets.